Ruble fall a blow to Indian steel

India may turn from a net exporter, to a net importer of steel, and the weakening of the Russian currency will only accentuate this trend. Source: Sergei Savostyanov / TASS

The sharp fall in the value of ruble has made Russian steel cheaper, and has forced Indian steel makers to lower their prices.

The fears of Indian steelmakers have
been confirmed – the significant devaluation of the Russian ruble has led to
Russian steel becoming much cheaper. Indian consumers now find it more
profitable to purchase Russian goods.

The largest steel producers in India
are planning to lower steel prices to the lowest level in the last 12 months.
Prices for hot-rolled steel in Mumbai have fallen by 10 percent since the
middle of last year.

According to the Ministry of Economics
of India, “the prices of some grades of imported rolled metal products have
reached absurd levels, forcing Indian manufacturers to lower their prices. This
raises concerns that our exports will decline, while imports will flood our
market.”

Related:

Russian steelmakers can now sell steel
at 25% less than in July 2014, due to the weakening of the ruble. According to
experts, Russian companies now have the ability to offer discounts, for
example, on hot-rolled products, which Indian companies are now selling at
$550-600 per tonne.

In addition to cheap Russian steel,
the situation is aggravated by increased deliveries from South Korea, which has
a surplus of steel and is now looking for new markets. Another important trend
is the increasing imports from China,
where the cost of rolled metal products fell by 22 per cent.

Indian steelmakers claim that prices
will keep falling for the next few quarters, unless the Indian government does
something to counter the influx of cheap imports. They are asking the
government to restrain imports by higher customs duties on foreign steel, and
ensure a balanced steady flow of imported steel into the country. This last can
be achieved by a refusal by the Bureau of Indian Standards to issue quality
certificates, which are required for imported goods.

“We ask the government to turn its
attention to the quality standards of foreign manufacturers, and we expect to
see changes in customs policies and tariff barriers, in order to block the path
to cheap steel,” said the head of JSW Steel, one of the largest steel companies
in India.

India’s positions in the global steel market
has come under attack. Experts believe that traditional foreign consumers of
Indian steel, primarily in the Middle East, may now start buying the Russian
steel, especially since the sanctions imposed against Russia have considerably
weakened the demand for Russian goods in the West. The increasingly active
Chinese steelmakers, in the Middle East market, are only exacerbating this
situation.

According to a senior economist at the
research department of Ministry of Steel, A.S. Firoz, sometimes this year,
India may turn from a net exporter, to a net importer of steel, and the
weakening of the Russian currency will only accentuate this trend.